Forex News: European government bonds spend the day trapped in negative numbers as news of US government moves to bolster ailing mortgage lenders Fannie Mae and Freddie Mac reverses the safe haven flows of recent weeks. September bunds pare declines after weaker-than-expected May euro zone industrial output data, -0.6% year-on-year versus forecast +0.4%, pointed to slower economic growth. Markets look ahead to Tuesday's release of Germany's ZEW economic sentiment index, with business expectations seen at -56.0, versus -53.4 in June, and current conditions seen at 31.0, versus 37.6 last month (0900 GMT). The yield curve is mixed as the 2-year/10-year spread flattens to +1.5 bps from +6.0 bps Friday, while the 10-year/30-year spread steepens to +30 bps from +29.5 bps Friday. September bunds are down 0.18 at 111.88, within a 111.57-111.91 range. The 10-year is up 0.03 at 98.38, to yield 4.450%.
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